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Text Books? Scholarly Journals? How Does a Quadrupling Dividend Come From That?

John Wiley & Sons (JW-A) (JW-B) was founded in 1807 and, this side of postal meter supplier Pitney Bowes (PBI), you’d be hard pressed to find a company that, on first glance, seems more doomed.

It prints things, for goodness sake. And we all know how investors feel about ink on paper: rest in peace, Borders and may we all take pity on Barnes & Noble (BKS); adios via spinoff magazine group at Time Warner (TWX) and newspaper and publishing assets at News Corp. (NWS); and how on earth does printer R.R. Donnelley (RRD) stay in business?

And, indeed, Wiley is mightily challenged. Its textbooks and reference books are still wanted, but customers want them in digital editions and that’s a harder way to make money. Its scholarly journals, some 1,600 of them, are also subject to the shift to digital distribution and with all the good stuff to read for free on the Internet these days, maintaining subscription counts isn’t easy. And the government crack down on for-profit colleges doesn’t help textbook demand.

A restructuring plan at Wiley sounds like a wise move, but when the company describes the plan – streamlining sourcing of supplies, cutting out a few management layers, outsourcing and offshoring some lower-value tasks – one wonders whether Wiley missed the 1980s. Are we casting out the quill pens, too?

So perhaps Wiley deserves the anemic PE ratio is carries. But the company has a fighting chance and then some to manage the shift to digital sales, now accounting for about 40% of revenue and growing, and its extreme-niche businesses shelter it from competitors who are on the lookout for huge market opportunities, not tiny ones, like Amazon (AMZN). Wiley launched the Wiley Job Network, a sort of LinkedIn (LNKD) for science and academic types to build loyalty among its journal subscribers and other customers.

Sales and profits, given the wind in Wiley’s face, haven’t been bad.

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Wiley is making acquisitions to speed the transition to digital content and, with just 5,200 employees, doesn’t seem like it has larded on costs over its two centuries in business.

But where the company really shines is in showing shareholders a good time. The dividend yield is a decent 2.5% but the payout has grown almost 400% over the last decade. And the payout ratio is just 28%, meaning Wiley has room to keep sharing the love. We at YCharts emphasize dividend growth as opposed to current yield.

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Wiley’s success is far from assured, and that means its shares are frequently cheap relative to similarly-performing stocks. So there risk and reward, which is how it ought to be.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.